The Office of the Comptroller released its detail of the May (1st quarter) distributions of county income taxes. According to the electronic message, the May distribution totals $781.7 million an increase of 5.3% over last year’s distribution. This increase can be attributed to a number of factors:
Employment in the State increased by 0.7% in the first quarter, although growth was boosted in part by the comparison period which included the back-to-back snowstorms of February 2010. Even disregarding that event, growth of 0.7% is not particularly strong, particularly at this point of the economic cycle. That withholding is increasing by 4.9%, however, may be somewhat encouraging, as it indicates average wage increases of roughly 4%. Estimated payments increased by 1.7%. Due to safe harbor provisions regarding interest and penalties, this performance is not necessarily reflective of actual activity or, for that matter, expectations for the entirety of tax year 2011. Combined, withholding and estimated payments increased 4.6% for the first quarter.
The unallocated reserve, refund reserve, local tax, and cost of administration percentages are those developed from tax year 2009 returns; all percentages have been adjusted where necessary for Baltimore City’s rate change. After accounting for the reserves, the local tax, and the cost of administration, local tax for distribution increased 5.1%.
The message also reminds counties that the Comptrollers Office must be notified by July 1, 2011 if you intend to change your local income tax rate for tax year 2012.
If you have questions regarding the May distribution, please contact Judy Oberist of the Revenue Administration Division, at 410-260-7606.